The term used to describe people who are physically challenged is 'differently abled'.

Explanation:
Physical challenges refer to any condition or impairment that limits a person's physical abilities. It can include difficulty in walking, seeing, hearing, or using one's limbs. In the past, terms like 'disabled' or 'handicapped' were commonly used to describe individuals with physical challenges. However, these terms are now considered outdated and potentially offensive.

Why 'differently abled' is the correct term:
1. Respectful language: The term 'differently abled' is preferred as it focuses on the unique abilities and strengths of individuals with physical challenges rather than emphasizing their limitations. It promotes inclusivity and respect.

2. Positive connotation: 'Differently abled' implies that individuals with physical challenges may excel in areas where others may not. It acknowledges that everyone has their own set of abilities and talents, regardless of their physical condition.

3. Overcoming stereotypes: By using the term 'differently abled,' we challenge stereotypes and biases associated with traditional terms like 'disabled' or 'handicapped.' It helps to break down barriers and promote a more inclusive society.

4. Emphasizing abilities: The term 'differently abled' recognizes that individuals with physical challenges may have unique skills and talents that can contribute to various aspects of life. It encourages society to focus on their abilities rather than their disabilities.

5. Inclusive and empowering: By using 'differently abled,' we aim to create a more inclusive and empowering environment for individuals with physical challenges. It promotes equal opportunities and encourages society to make accommodations for everyone's needs.

In conclusion, the term 'differently abled' is now widely used to describe people with physical challenges. It is a respectful and inclusive term that focuses on their abilities rather than their disabilities, promoting equality and empowerment for all individuals.

People who are physically challenged are referred to as "differently able".